Buy Adani Power; target of Rs 669: ICICI Securities

ICICI Securities's research report on Adani Power

Weak power demand impacted the PLF of operational power plant and merchant prices in Q1FY26. Merchant realisation in Q1 declined to INR 6.5/kWh (vs. INR 7.6/kWh YoY). As a result, Adani Power (APL) reported Q1 with EBITDA and PAT at INR 57bn (-8%) and 33bn (-16%), respectively. Its dependence on merchant is currently at 22% which could decline in next few years. In Q1, it signed a PPA for 1.6GW at an attractive tariff, taking its total under construction (UC) capacity with PPA to ~5GW (out of 12.5GW). State discoms are in the process of floating PPAs. As a result, we expect new tenders from state discoms to improve the outlook of the upcoming untied capacity. In Q1, it had also placed an additional 4.8GW turbine order, signalling its plans for new capacity addition beyond 31GW. Retain BUY with revised TP of INR 669 (earlier INR 610).

Outlook

Maintain BUY with revised TP of INR 669 (earlier INR 610) as we roll forward to FY28E earnings. We believe new PPAs are being signed at attractive rates.